If you realise you have made a mistake or forgotten to withhold, you can request an amendment.

Where you have already lodged some of your BAS and have not been withholding the correct amounts, you need to correct this mistake by lodging a revised BAS. You cannot correct the withholding understatement on a future BAS. You need to write to the ATO if you did not withhold any PAYG from PSI received, but you should have.

You must use the legislative method to work out the amount to withhold when revising a BAS. You cannot use the simplified methods for a PAYG payment period that has ended. However, you can use one of these methods for future PAYG payment periods.

If your business does not report and pay additional PAYG withholding amounts when required, penalties and the general interest charge (GIC) may apply. The penalty is equal to the additional amounts that should have been paid to the ATO.

However, the ATO have the discretion to remit the penalty amount. When deciding on remission of penalty, they consider many factors including any PAYG instalments paid. The amount of penalty remitted is considered on a case-by-case basis.

Example: incorrectly reporting PAYGW

Betty started her business as a management consultant in August and contracted for her personal services through her company, Betty Pty Ltd. As a small withholder, the company reports and pays PAYG withholding quarterly.

The company did not realise it had additional PAYG withholding obligations until early December. It had already lodged its September BAS without reporting its additional PAYG withholding obligations. The company must lodge a revised BAS for the September quarter to correct the withholding understatement. It cannot correct the mistake in a later BAS.